Principles: Life & Work – Ray Dalio – Bridgewater Associates Founder

Principles by Ray Dalio is a stunning exercise is critical thinking about the place of ego in business. Bridgewater Associates is a hedge fund that manages o
ver $150B in assets (thanks, Wikipedia!) and Dalio is the founder of the firm. Throughout it’s ascendancy to the largest hedge fund in the world, Dalio has been entirely focused on data-driven analysis. An early adopter of algorithmic modeling to predict outcomes, Dalio over the course of company ups and company downs wants to create a data-driven management tactics – but he, himself, was exempt from the critical feedback due to his position as CEO. But after his senior leadership provided direct feedback to a company wide memo, stating that “Ray sometimes says or does things to employees which makes them feel incompetent, unnecessary, humiliated, overwhelmed, belittled, pressed or otherwise bad…If he doesn’t manage people well, growth will be stunted and we will all be affected.”

This brutal honesty allowed Dalio to see how ego (specifically his own) harmed the growth of his business – it slowed the creation of more revenue, more profit & more happy – which are, as you know the outcomes that we seek via #TRIPLETHIS. So Dalio set out to create an atmosphere of radical honestly. Through software Bridgewater created, ideas and presentations are graded in real-time. Scores are made public, and the goal is to have Bridgewater perform as a pure meritocracy. The rise of Bridgewater speaks to the efficacy of the idea.

This concept of radical honesty and transparency may not be right for you and your business. Throughout the book, Dalio shares instances of failure, personally and professionally, and he explains the processes that he used to learn and grow. Principles is not an easy read (it is north of 500 pages). It delves into investment management minutiae here and there, but it is not a book about money. It is a book about Dalio creating systems that allow him to pursue his version of the truth. His approach is radical in the truest sense of the word. It eschews many social conventions – conversations and meetings are all recorded, so employees live in a kind of surveillance state. However, the surveillance is not there to punish, but rather for employees and staff to review their performance and improve as if their world is some sort of NFL film review session. It requires humility to allow yourself to see yourself as others see you, without the context of internal dialogue.

Frankly, I am not sure that Dalio’s principles are the right way for many organizations. Handled wrongly, this radical honestly turns quickly into cruelty. But the emotional journey that Dalio takes you through via this memoir/philosophy treatise is amazing. In reading about this dispassionate world where emotion can hinder financial performance, I found myself on the edge of tears because I heard my own defensiveness, I heard my own tales of mis-steps and my own self-coddling. Regardless of what you implement of Dalio’s approach, you will find yourself being more honest with yourself, even if only while you imagine yourself with a Bridgewater business card.